Australia’s neighbor, Nauru, has signed a $1 billion infrastructure agreement with a Chinese enterprise, ringing alarm bells in Australia. Australian officials announced on Monday (August 25) that the country will seek approval for a security and economic treaty signed with Nauru before next month. This agreement grants Australia veto power over Chinese investments in key sectors in Nauru.
On August 11, the Nauru government announced an investment agreement worth $1 billion with a Chinese company called “China Rural Revitalization Development Company”. The Australian government has requested Nauru to provide details of the agreement.
According to Reuters, the agreement between Nauru and the Chinese enterprise is likely to violate a significant security and economic treaty signed between Australia and Nauru in December last year. At that time, Australia promised $100 million in budget support, $40 million in security assistance, and obtained veto power over China’s involvement in key sectors such as security, banking, and telecommunications in Nauru.
Although the treaty has been approved by Nauru, Australia has not ratified it yet due to the dissolution of the Australian parliament for several months because of the national election. The investment agreement between Nauru and the Chinese enterprise has raised urgency in Australia.
“It is important that we move forward and approve the treaty as soon as possible,” said Mark Tattersall, an official from the Australian Department of Foreign Trade, to the Australian parliamentary committee reviewing the treaty.
The Nauru government previously stated in a press release that the Chinese enterprise will develop renewable energy, phosphate industry, fisheries, water resources, agriculture, transportation, and health industries.
Tattersall mentioned that Australian diplomats have inquired to China and Nauru about the agreement because of concerns that it might trigger clauses in Australia’s security treaty.
He said Nauru’s response was that the cabinet has not considered this Chinese investment.
Australia hopes to announce the approval of the Nauru treaty at the upcoming Pacific Island Leaders Meeting next month. Beijing will not be attending this meeting.
In recent years, Australia has become increasingly concerned about Beijing’s ambitions in the Pacific Islands. In 2022, the Chinese Communist Party signed a security agreement with the Solomon Islands, to which Australia responded by stating that the lack of transparency in the agreement’s formulation could disrupt the stability of the region.